Nigeria: Between economic challenges and recession
‘Nigerians Should Brace Up For Tougher Times Ahead’
Since the sudden crash of crude oil price which is the main source of revenue for the Nigerian government, the country has continued to witness several economic challenges namely inflation, job losses, paucity of funds, high cost of living, forex scarcity, unemployment among others. Economists and financial experts are sharply divided on whether the country’s economy has gone into recession or facing temporary challenges. Government has consistently maintained that the economy is experiencing unprecedented challenges presently and the only way out is diversification. Many argue that the present government’s economic policy, which has remained a subject of inconsistency and controversy has not fast-racked the revival of the ailing economy.
That Nigeria is experiencing its all time low rating in almost all areas of economic indices is no longer news, though not yet experiencing recession but the signs are ominous going by the present unemployment rate, poverty, job losses and inflation.
A management consultant and business practitioner based in Lokoja, Dr. John Alabi, who was not trying to be an alarmist, but putting the issues in their right perspectives said the hard times are just starting, Nigerians should brace up for more difficult days ahead.
Just like the saying that ‘he who fails to plan, plans to fail’, Dr. Alabi indicated that when the going was good with the oil boom, Nigerian leaders were contented with squandering the revenue that came from oil the only source of foreign exchange.He said the country found itself in the present mess because at Independence, agriculture was the mainstay of the economy but when the crude oil was discovered, other natural resources were abandoned.
“The situation is that we are a mono-cultural economy that depends on one single source of income. You also know that the prices of this commodity is tied to the apron strings of these world powers, you find that when people de-emphasize the use of crude oil, price crashed. “Secondly is the corruption issue and bad governance witnessed over these years, if we had managed our good days we would have not been in the present mess.”
The consultant said: “Nigerian leaders used the revenue as if it would never end and along the line they did not diversify into other sources of revenue.
“We should have diversified into solid minerals and tourism potentials. Nigeria would have been earning revenues from different sources.”Alabi noted that corruption in monumental level is another issue that happened to Nigeria through leakages here and there.
“ We have been talking about Abacha loot since 1994 till now, when will it end. Look at the scandal in the last 12 to 15 years. This is what has brought us down to the level where we are today.“Another reason are the followers, we are so docile and we have collaborators. It is not our politicians alone but people in uniform, and people without uniforms, even public servants they are collaborators they help politicians to embezzle funds.”Continuing he said: “We gradually lost our conscience, we go to Church and Mosques but we are not Godly. Except we reverse the trend the problem will continue.
In spite of all the negative signs, he said: “Nigeria was not in recession, but the signs are that we are slipping into recession with the obvious indices we are seeing. Inflation is very high, unemployment index high and the various hardships we are facing by way of high cost of living, when you have that coming in, everybody will think we are in recession.
“We are not in recession because you can see foreign exchange trickling in and we pay for our import bills so we are not in a depression.”
Continuing he said: “We are slipping into it because of the high level of poverty, inflation, unemployment and job losses. These are the indications that we are slipping into recession if we don’t take adequate precautions.”
On the effect it will have on Nigeria and Nigerians, he stressed that already there are serious problems like the galloping inflation.
“For the first time we are having six to seven years inflation, going to about 15%, prices of virtually everything is going up and it is going to affect us because the purchasing power of individuals have reduced. It is now a poverty strikes state with 60 to 70% living below poverty line”Alabi said that
when sales started going down, the best thing to do is to reduce costs. “What banks are doing now is essentially just that, of course there are no deposits. The last five months the ratio at which people deposit money in the banks is so low because there is nothing to even deposit in the first place.
“If that happens by implication, manufacturers cannot produce and profits are going down so you now have the reason to cut costs. “What we are saying essentially is if we don’t address the situation we are at the moment and we go into recession. It would not augur well because there would be more hardship on the people.
“Government is trying to reflate the economy by pumping money into it through the budget. Half a trillion will be pumped into the economy as social security. So if jobs are created and people are empowered, they will not depend on government.”
He reiterated the importance of agriculture and its multiplier effects of creating income for the farmers, creating jobs for those doing it, adding that when there is money, people would buy goods and the economy will move.
On how Nigeria found itself in quagmire he used the example of Kogi State, where since 2007, when the State was about 16 years he prophesied that by 20 years Nigeria would have a challenge.“Problem with paying salaries and what happened? It has come to the fore. We saw this situation coming. When you depend on one product as source of revenue, the vagaries can affect you. When you put all your eggs in one basket, it is too risky.
“We have been singing the song of diversification of the economy but it is more of rhetoric than action, just pick three areas; Solid minerals, Agriculture, tourism and servicing.
‘Only Massive Diversification Can Bail Nigeria Out’
From Oluwaseun Akingboye, Akure
FINANCIAL experts and analysts have confirmed that the country is experiencing hard times, which they said made Federal Government to initiate bailout funds for States in 2015.
A business expert, Boye Oyewumi pointed out that the sharp fall in oil price in the international market, the attack by the Niger Delta Avengers on the oil installations, mass unemployment, dependence on imported goods, inability of the states to pay salaries among others, as veritable catalysts to economic recession.
According to Oyewumi, taking Ondo State as a case study, where the workers and pensioners have embarked on an indefinite strike action for the past two weeks over non-payment of five months salaries, there is a general downturn in the economy, Gross Domestic Product (GDP), alarming unemployment and inflation.
He said the country got to this situation through high interest rates, inflation, reduced consumer confidence which makes people to spend less money when they assumed the economy is bad, reduced real wages in a situation where the workers might be making the same amount of money but with weak purchasing power.
“The effects are not far-fetched, as we can see; government has found it very difficult to pay wages to its workers while capital projects that can be of immense benefits for the people are stopped due to shortage of funds. In some situation, the government and other private employers will have no option than to streamline their workforce.
“Drastically, this will lead to a great disaster to the nation if drastic measures are not taken to redress the ugly trend, which may ultimately result into economic depression,” he said.
The Master’s degree holder from Middlesex University, London, attributed the present economic and financial predicament in many States of the federation to the recklessness, lack of political will and drive to implement people-centred policies by the state governors.
“This is what happens when the electorate elect leaders that are driven by ambition, devoid of visions to govern them,” he lamented, saying further: “We wear the best of clothes, cruise in most exotic cars, but allow the worst people to rule us.”
Dappa Maharajah, the President of Movement for the Survival of the Underprivileged (MOSUP), an international NGO blamed government at all levels for their visionless attitude and refusal to heed to several warnings from economic and financial experts during the oil boom.
Maharajah stated that a public critic, late Prof. Olafioye Tayo of the English Studies Department of Adekunle Ajasin University, Akungba Akoko, in one of his books titled: Parliament of Idiots, forewarned of an impending danger in a poem titled: “Minimum Wage, Maximum Wahala.”
“What did we get? An astronomical rise in corruption and white elephant projects that have no meaningful impacts on the people. Many of those projects are petty things which individuals, private bodies and organisations can provide if government had put in place an enabling environment for their operations. But how will government embezzle public fund if such is of their mandate?”
Though there are no job losses in Ondo State government as promised by Governor Olusegun Mimiko, despite the fact that the monthly allocation from the Federation Account cannot defray running cost of governance, Oyewumi queried what happens to the small scale industries and petty traders in the State that could not survive the recession.
Nevertheless, 35 workers and pensioners in the State as revealed by the Chairman of Nigeria Labour Congress (NLC), Mrs Bosede Daramola, on Wednesday at the floor of the State Assembly during the intervention by the lawmakers, have died due to non-payment of five months salaries. Daramola warned that the toll may increase if government doesn’t take drastic measures to arrest the situation before more die of hunger and starvation.
Facing similar experience like thousands of bank workers and others workers sacked nationwide recently, a barber in Akure who identified himself as Ismaila Kamarudeen, lamented that he has closed down his shop for the past three months due to poor power supply and inability to buy fuel at N145.
A middle-aged woman who sells tomatoes, pepper and other agricultural products at Isinkan Central Market, Akure, told The Guardian that the high cost of transportation have been so unbearable and forced so many traders to opt out of the trade.
Finding lasting solutions to these problems, Oyewumi suggested that there must be serious agricultural revival, functional educational policies that are capacity-oriented and technologically-driven as opposed to the cosmetic, certificate-oriented form of education that has negative bearing on the nation’s economy.
He averred that the States need qualitative leadership that have no business doing business, but must create enabling environment for industries to thrive, and stop going cap-in-hand to the Federal Government monthly for allocation like beggars.
Arogbofa, who was a member of the 2014 National Confab in Abuja, stated that the solutions to the problems facing the nation as a whole are proffered holistically in the recommendations of the Confab report and would do the country good if the President takes it off from the archive for implementation.
“We said that things should be better managed. We said that the centre was too powerful, that some powers should be devolved to the States so that they can participate and contribute more, and the governors would stop going to Abuja monthly to beg for money.
His words: “There should be consolidated funds, that is the only area it appears that the government is doing something now because every state in this country has some mineral deposits.
“The fund should be there and they should make it available to the states to explore and exploit the mineral resource in their areas, because that is a better alternative to oil. And also, the committee on Agric made a lot of recommendations.”
‘Current Global Economics Crisis Is Original And Is Running Its Cycle’
From Anietie Akpan, Calabar
IN Calabar there is general hardship. The cash flow is poor and the business people are not selling. On almost everybody’s lips is “things are hard, there is no market, no money”. Everywhere it is the story of lamentation.
“In my life as a business man, I have not experienced this kind of bad market for six months running”, lamented, Mr. John Emeka a businessman in Calabar.
“The exchange rate to the dollar is too high, now you hold N1million yet you cannot buy anything and a 24 inches flat screen television we used to sell at N25,000 to N27,000 is now N35,000”.
In the popular Watt market in the heart of Calabar, four pieces of tomatoes that sold for between N50 and N100 is now N300 and N400 depending on the size.
A customer, who simply gave her name as Mrs. Imaobong, said: “This is a horrible period for us. But I hope things will improve because whatever goes up must come down and everything has its time and season.”
Reacting to Nigeria’s current economic quagmire, a mechanical engineer turned economist, Mr. Kennwood Ukpabi, said what is happening in Nigeria today is natural and will continue till middle of 2017 before succour would come and by 2019 another economic crisis or recession will hit Nigeria again except something drastic is done.
Sounding philosophical, he said: “A standing tree stands because of the roots, but strangely the root is hidden under the soil. Is the root different from the plant? Every idea has its own roots and the roots are hidden in the soil of the mind.”
Ukpabi who propounded an economic code or calculations theory called “Economic Risorgimento: the economics of global prosperity”, saying, “When I was old enough to read the Bible, I read Solomon ‘there is time and season’.
Then I concluded that everything else has times and seasons. It is based on this belief that I began to seek for calculations that would lead me to prosperity and help me cure poverty, having come from a very poor background myself. Now you know that if you seek for anything in the world, you will find it.
“Everything– that is, including economy and economic variables have times and seasons. Economic crisis is a cycle or has a cycle and those who follow times and seasons reap bountifully. However, there are two types–one is the artificial season caused by human manipulation and the other is the original season. I can only calculate the original season and he who has the original has everything. So, my comment on the current global economics crisis is that this is original and it is running its cycle. The economy of the world is a timeless ocean and must ebb and flow. And it’s now predictable: the way meteorologists predict or forecast other weathers.
“Nigeria is a small part of the global economy, and must respond to what I call peripheral influence. He recommended that “the government should set up a special research unit, reportable directly to the president, to inform or advice him on the economic weather and appropriate time for investment. I don’t mean putting previous events together and projecting a speculation. That is gambling with numbers. A situation where a nation is overtaken by financial disasters is not healthy for her people. You will recall that the ‘sons of Issachar’ were a people who knew the times and seasons of the world. If we go to farm en-masse this year, 2016, there would be enough food for the next two years; by then the economy would have picked up. I call it toggling. Invest in agriculture in-house and in stocks and shares overseas.
“One more thing: It is difficult to lead a people who are not reinvented. The leadership of the country should establish an institute where people can be taught about executive reinvention. It helps to engage the brain positively. If people engage their brains well, they create wealth; otherwise we consume wealth and create babies we can’t nurture. Government should stop looking at visible money to devour, and fashion out creative ways of creating wealth for their task and the people
‘Nigerian Economy Is Under Serious Recession With Clear Indices’
From Lawrence Njoku (Enugu)
AN Enugu-based Economist and Policy analyst, Mr. Chiwuike Uba has said that it was no longer contestable that the country’s economy was under serious recession going by certain indices that have manifested in the time being.
He said: “This has been confirmed by even government agencies. All socioeconomic indicators attest to this fact.
Our GDP started its auto downward growth from 5.94% in last quarter of year 2014 to -0.36% in first quarter of 2016. Nigeria’s industrial production/capacity reveals worse growth pattern since first quarter in 2015 with a negative growth rate of -2.53% to -5.49% in first quarter of 2016. Interestingly, our trade import and export follows the receding trend/pattern of the economy with a 15.8% year on year and 7.8% quarter on quarter decline in trade imports. Our trade export slumped to a 52.36% year on year and 34.6% quarter on quarter in first quarter of 2016. Capital importation decreased by 54.36% from last quarter in 2015 to first quarter of 2016, showing that Nigeria’s economic environment is getting tougher with its attendant investor uncertainty and discouragement”.
According to him: “The signs are everywhere in the country. In addition to some of the statistics I discussed above, it is evident that most traders currently find it difficult to sell their goods because most Nigerians do not even have money to buy. Most companies are closing shop, stock prices are failing daily with Nigeria’s market capitalization on auto decline.
“Painfully, unemployment rate is widening with its current rate at 12.1% and youth unemployment rate at 42.24%. Most times I really shudder over the alarming rate of youth unemployment because of its implications on the security of the country. Unfortunately, it seems government is not as worried as some of us are. The few government recruitments are done behind closed doors, shared among children of the elites and politicians as evidenced in the CBN and FIRS recruitment scandals.
To confirm that all is not well at the moment, almost all the state governments owe their workers and in some cases, workers are paid a proportion of the salaries. Some states are planning to commercialise their MDAs after mismanaging the bailout funds. Workers are losing their jobs daily because most companies are no longer able to meet their bottom line. There are lifestyle changes/adjustments with the reduction in entertainment, dining and extra-curricular activity expenses”.
Asked how the country got into the economic mess, he stressed: “Nigeria is in this economic mess because of years of lack of development planning, mismanagement of resources, looting by the politicians and their cohorts, corruption and pillage of our common resources by the civil servants, over-dependence on oil revenue, non-diversification of the economy, wastages by the government, lack of demand for accountability by Nigerians and finally, ethnicity, religiousity and rogue elitism driven change. A mentor aptly captured it as “Nigeria hurriedly ate her dinner as breakfast” thinking that the chicken that lays the egg is still healthy and productive even when it is evident that the chicken is sick and dying.”
He continued: “The situation is already affecting Nigerians heavily. I am sure if one asks you same question you surely will have an answer.
The young and old attribute the hard times to ‘change’ promised by the government. The current situation has led to employee lay-offs and benefit reductions in some case, cuts to quality of goods and services with its attendant implications, and widening unemployment and underemployment rates amongst other challenges. Workers have been forced to work harder and longer hours in order to please their employers to avoid layoffs. Painfully, school drop -out rate is increasing because parents can no longer pay school fees and more deaths are being recorded because most families cannot afford the cost of medical care.
“In the long-run some Nigerians will lose the opportunity to gain skills and on-the-job training, making it even more difficult for the person to gain a job in the future. Recession imposed children malnutrition and school drop-out will have ‘permanent’ stunted development and academic under-achievement on those children. In addition, firms that closed shop during recession, it is evidently difficult to restart business because of lack of venture capital.
“It was staring us in the face long before now. Those who had voice shouted when the ‘sharing’ was going on. State governors kept demanding for the sharing of the savings without thinking of the future. It is more worrisome that, instead of developing their various states with the ‘shared’ money, they were all busy sharing money to their friends and well-wishers.
Experts Give Reasons For Current Economic Challenges
From Ann Godwin (Port Harcourt)
ECONOMIC and financial analysts have blamed the nation’s current economic woes on the inability of previous administrations to invest and save during the financial boom in the country.
The experts also attribute the present challenge to economic contraction accompanied by low economic growth, high unemployment and high inflation.
Speaking on the development, a senior lecturer in the Department of Economics, University of Port Harcourt, Dr. Peter Medee pointed out that the economy of Nigeria is presently in recession.
He explained, “Anytime the economy is experiencing two consecutive periods of contraction, it can be said to be going through recession. In business circle, there is the contraction phase, the expansion, the peak and the top. So the recession in Nigeria is accompanied by low level of employment, high inflation, low economic growth”.
He added that the situation was also occasioned by external shock where economic events arising outside the country caused it.
“What we are experiencing in Nigeria is from the international goods market; our major sources of revenue is oil and it is now being characterised by low price, the output level devastated as a result of militancy attack as well as, oil theft and oil bunkering” The Varsity Don stated.
“These have affected the level of income in the country and government is unable to finance a lot of activities in terms of payment of salaries and carrying out capital projects and, as a result, these affects economic activities, thereby bringing hardship to the people due to the fact that the economy is not stimulated”.
But a financial analyst, Mr. Ignatius Chukwu, said the country is not in a recession but rather in a serious economic contraction.He lamented that a lot of families are being put into serious hardship due to the drop in the country’s income level.Chukwu attributed the challenge to global shift in the oil price which according to him has ripple effect in the economy and as well caused by transformation shock.
Speaking further, Medee warned that if nothing is done urgently to arrest the challenge, it will lead to economic depression and consequently lead to unprecedented hardship where everything will begin to collapse in the country.
On what brought Nigeria to where it is today, Medee said; “Where we are today is because when Nigeria was experiencing a boom in the economy, the previous administrations failed to make investments that would have yielded productions but instead of investing, there was high massive corruption in the system. Monies gotten from the boom were diverted to private accounts, so failure to plan for the rainy day and the neglect by the previous administrations brought us to where we are today”
He, however, advised the government to place its priorities right by diversifying the source of revenue, reduce excessive dependence on oil and work on things that have comparative advantage.
He added: “There is also need to put in place aggressive economic policies to mitigate the challenges, so the CBN and Ministry of Finance should put in serious efforts to get Nigerians out of the mess”.Chukwu on his part, canvassed for local refining of petroleum products to help mitigate the challenges.
He said: “There is need to refine locally so that Nigeria will be a major market for crude oil instead of importing. If we can refine one million barrel per day, consume 300,000 barrels and export 700,000 barrels, there will be jobs for the unemployed and the economy will begin to catch up.”
Sadly, some people who have lost their jobs as a result of the dwindling economy have cried out over the devastating effect on them.Nelson Umeh who was working with one of the new generation banks in Port Harcourt told The Guardian that his children have stopped schooling because he could not pay their school fees, adding that feeding has become a great challenge to his family as they sometimes go to bed without food.
Miss Caro Micheal, who was dismissed from a private company in the state said, life has become miserable for her and her family.She noted that as a bread winner in her family, since she lost her job, her sick aged mother could not be taken to the hospital due to lack of money, lamenting inability to feed.